A Washington Post story today, entitled "Did your college mislead you about job prospects? It might become far easier to have your loans forgiven," explains:
A little-known rule called Borrower Defense to Repayment, which is making its way through the regulatory process in Washington, initially was aimed at cracking down on the fraudulent behavior of for-profit colleges. But the rule released last month and set to take effect next July applies to any college or university, including traditional non-profit institutions.
The 230-page rule is based on one sentence that was written into the renewal of the Higher Education Act by Congress in the early 1990s. It allows student-loan borrowers to make a claim for “acts or omissions of an institution.” The current regulation, on the books since 1994, is pretty ambiguous about what kind of acts or omissions rise to the level of the federal government discharging loans.
Few paid attention to the rule, or took advantage of it, until the for-profit chain of Corinthian Colleges collapsed last year and students said their federal loans should be dismissed because they had been defrauded with Corinthian’s false job-placement claims. Since then, the department has been inundated with more than 25,000 claims, mostly from former Corinthian students (the department has discharged about $73 million in loans for about 4,000 students).
During that process, it became clear that the 1990s-era rule wasn’t detailed enough. That’s why new regulations are coming.
The full story is here.
